You may have heard of something called “NFTs” and how they are becoming a popular way to make money. They’ve been all the rage in the cryptocurrency world, with some buying then selling them for huge profits. This article provides a brief but comprehensive overview of NFTs, will explain whether or not you can really make money with them, and answer some of the questions you may have.
- Here's the program
- What are NFTs, and how do they work?
- How can I make money with NFTs?
- What about the NFTs controversy? Is it real or bubble?
- Can I make money with my own NFT, and how?
- What’s the future of NFTs
- Conclusion
- EcoTips
Before we get started, you should know that I’m going to use some slightly technical terms related to cryptocurrencies and the blockchain. If you’re neophyte in this field, I highly recommend reading this article on bitcoin before starting this one. That said, it’s not imperative either.
What are NFTs, and how do they work?
Basically, NFTs are digital assets, similar to cryptocurrencies like Bitcoin, used to trade in the digital world. These assets can be:
- an image (a photograph, digital art, avatar, meme, etc.)
- a song, music…
- a short or long-form video
- a social media post
- a piece of land in the Metaverse
- collectibles in a video game
- etc.
The acronym “NFT” stands for “non-fungible token”, a tricky term to designate a valuable digital asset, created with a unique identification that cannot be replicated or replaced, in order to serve as proof of ownership. These unique IDs, which allow NFTs to be transferable and tradable though, are stored on a blockchain, a secure and decentralized ledger that records all transactions made with the NFT.
Don’t worry. If this still seems a bit nebulous to you, just keep in mind that NFTs are an innovative, effective, and safe way to know who owns a digital item.
What is blockchain?
The “blockchain” allows the storage and transmission of data in a transparent and secure way and especially without centralized intermediary. The various pieces of information are, therefore, stored and distributed on a large number of remote computers called “nodes”, which are spread all over the world, without any central entity needing to control access to a user’s files.
The 3 entities that guarantee its security are: the sender, the receiver, and a third party. Each of them must confirm and approve any new transaction on the network. Bitcoin transactions are stored and can be traced in a digital ledger called “distributed ledger technology” (DLT).
And if you want to know more about blockchain, I suggest you read this very interesting article.
So, how does it work concretely?
NFTs work by using smart contracts to create a unique token on a blockchain (mostly minted on the Ethereum blockchain) that represents an asset. This could be anything from a virtual world item to a piece of digital art.
The smart contract contains all the information about the NFT, including who owns it and how it can be transferred. When someone wants to buy or sell an NFT, they use a decentralized exchange to do so. This ensures that the transaction is secure and that the NFT cannot be duplicated.
How can I make money with NFTs?
There are a few ways to make money with NFTs:
- Buying and selling NFTs: You can buy NFTs on a decentralized exchange and then sell them when the price goes up. This is similar to investing in cryptocurrency, but you are buying a specific asset rather than a currency.
- Creating NFTs: If you have a creative talent, you could create and sell your own NFTs on a decentralized exchange. This could be anything from digital art to in-game items.
- NFT Gaming: You can also earn money by playing games that use NFTs. For example, the game Decentraland uses NFTs to represent in-game items and land. You can earn money by selling these assets or playing the game.
- Staking NFTs: Stalking consists of locking an NFT, or any other crypto asset, on a wallet for a long period of time after which you receive a reward. It’s a fairly quiet and generally profitable investment, which is however a bit more risky.
- Licensed Collectibles: You can also earn money by buying licensed collectibles. These are physical items that have been authenticated and approved by the company that owns the license. For example, you could buy a licensed NBA collectible.
- Invest in NFT startups: You can also invest in NFT startups. This is a riskier investment, but it could pay off if the startup succeeds.
What determines the value of an NFT?
Generally, the value of an NFT is determined by the market, based on a number of factors such as scarcity, utility, demand, type, etc. For example, an NFT with a limited supply and high demand from buyers will naturally fetch a higher price than one with a more plentiful supply.
Similarly, an NFT that provides utility or functionality beyond simply being a collectible or piece of digital art will also tend to be more valuable. Of course, like with any asset, the value of an NFT can also be influenced by the actual hype/trends, who’s the creator, etc.
What about the NFTs controversy? Is it real or bubble?
There is a lot of controversy surrounding NFTs. Some people believe that they are a scam or a bubble while others believe they are digital assets’ future.
The main arguments against NFTs are that they are overpriced and that they are not backed by anything. For example, a virtual world item may only be worth a few dollars, but the NFT could be selling for hundreds or even thousands of dollars. This is because there is no way to determine the true value of an NFT. They are also not backed by anything, so if the company that created the NFT goes out of business, the NFT could become worthless.
The main arguments in favor of NFTs are that they are unique and immutable. This means that they cannot be duplicated or counterfeited, which is a major problem with physical assets. They are also stored on a blockchain, which is a secure and decentralized ledger. This makes them more secure than traditional assets, such as stocks or bonds.
So, it seems that NFTs are revolutionizing digital investment; you can make money with them by buying, selling, or creating your own NFTs. But, like any other investment, there is a risk involved, and you should do your own serious research before investing.
The most famous NFTs are probably the “Bored Ape“.Can I make money with my own NFT, and how?
Seeing as how NFTs are a relatively new concept, it’s difficult to say whether or not you will make money with your own NFTs. Once again, this depends on multiple variables, but there are many ways for you to make money by creating your own NFTs. You can sell them on the blockchain, you can build your own business around them and list them on your own website, or you can create a game that uses your NFTs.
The possibilities are limitless, and the market is still young. Everything is still to be invented or created. If you are an artist or a creative interested in getting into the business of creating NFTs, browse the web for new information, trends, events, and anything that will help you get to know this market.
What’s the future of NFTs
NFTs are a new and emerging asset class with a lot of potential. Their unique properties make them well suited for a variety of use cases, such as digital art, in-game items, and real-world assets.
While there is risk involved in investing in NFTs, they have the potential to become more widely adopted in the future. As the technology matures and more people become aware of them, NFTs could become a mainstream way to invest in digital assets.
Conclusion
NFTs are digital assets that have unique properties and the potential to become widely adopted. They are stored on a blockchain, which makes them secure and immutable. While there is risk involved in investing in NFTs, they offer a new and exciting way to invest in digital assets.
There is certainly a lot more to say about NFTs, but if you’re interested in learning more about them, I advise you to check out specialized websites which are full of even more detailed information and understand the risks involved before investing.
Disclaimer: This article is not financial advice. Investing in NFTs is risky, and you should only invest what you can afford to lose. We are not responsible for any losses incurred as a result of investing in NFTs.
EcoTips
Environmental and climate change issues are more than ever at the heart of the concerns of this 21st century, which is why I am proposing a few ideas that will enable you to limit the negative impact that the implementation of this idea could have.
These solutions that I suggest are sometimes largely insufficient to compensate for these negative impacts, such as carbon offsetting. Unfortunately, there is not always an ideal and 100% efficient solution, far from it. And if you have others, please do not hesitate to share them in the comments below.
As with cryptocurrencies, NFTs, based primarily on the Ethereum blockchain, are generally stored on energy-intensive servers, and only a very small fraction of them are powered by green energy. Since NFTs are still relatively young, we can only hope that this situation will change quickly. And if you have information about existing or developing solutions, feel free to share them with us in the comments section.
Pros
- Can’t be duplicated: Because they are stored on a blockchain, NFTs cannot be duplicated. This makes them unique and immutable.
- Secure: The blockchain is a secure and decentralized ledger. This makes NFTs more secure than traditional assets, such as stocks or bonds.
- Fungible: NFTs can be exchanged for other NFTs or for currency. This makes them more liquid than traditional assets, such as real estate or art.
- Can represent real-world assets: NFTs can be used to represent assets in the real world, such as land or artwork.
Cons
- No intrinsic value: NFTs do not have an inherent value. Their value is based on what someone is willing to pay for them.
- Not backed by anything: NFTs are not backed by any asset, such as gold or government currency.
- Risk of fraud: There is a risk of fraud with NFTs, as there is no central authority to verify the authenticity of the asset.
- High transaction costs: The transaction costs associated with NFTs are high due to the fees associated with the blockchain.
Info
- Location: From home or anywhere. You only need a secure Internet connection.
- Investment: Variable, but be careful not to spend more than you can afford.
- Earnings perspective: Very variable. It depends on different factors such as your knowledge of the market but also on a bit of luck.
- Required: Have a taste for risk and be interested in this market.
- Risk level: High, since the NFT market is unpredictable. However, before you start investing in NFTs, you should do your own research and understand the risks involved. NFTs are a new and unproven asset class, and there is a risk of fraud and loss of investment. You should only invest what you can afford to lose.
- Implementation time: Quite fast. You can start to buy your first NFTs today and sell them with a benefit in just a few days (or even hours) later.
- Material needed: A laptop or a smartphone and an Internet connection.
It sounds great, but I don’t trust cryptos or NFTs 🙄
Hi Megaman, what do you mean by “I don’t trust…”? If you mean it’s quite risky, I can’t deny it 😅 But it’s true that people are making money with them.
I know. I should have bought some in 2009 when Bitcoin was under $1 😭
Or even in 2016, when it was still $300! Let’s go buy a time machine on Amazon 😂
😂😂😂